Press Releases

Univar Reports 2017 First Quarter Financial Results

5 May 2017

First Quarter 2017 Highlights

Reported net income of $22.6 million, or $0.16 per share, compared to net income of $14.0 million, or $0.10 per share reported in the prior year first quarter. Net income for the first quarter 2017 included revaluation losses of$4.1 million, or $0.03 per share, for movements in the U.S. dollar value of foreign currency denominated loans and monetary balances.

Adjusted EBITDA grew 6.1 percent to $142.3 million compared to $134.1 million in the prior year first quarter. Canada, EMEA, and Rest of World segments in aggregate increased Adjusted EBITDA 16.4 percent (19.7 percent on a currency neutral basis), and USA segment reported modest Adjusted EBITDA growth after eight consecutive quarters of declines.

Warehouse, selling, and administrative expenses of $226.1 million were essentially equal to the prior year as investments in sales force, digital tools, and training costs were offset by productivity gains.

Univar reported net income of $22.6 million, or $0.16 per share, compared to net income of $14.0 million, or $0.10 per share in the first quarter of 2016. Net income for the first quarter 2017 included revaluation losses of $4.1 million, or $0.03 per share, for movements in the U.S. dollar value of foreign currency denominated loans and monetary balances.

2.1 percent, and gross margin increased 50 basis points to 22.0 percent, largely due to favorable product and market mix, as well as margin management initiatives. First quarter Adjusted EBITDA increased 6.1 percent to $142.3 million from $134.1 million reported in the first quarter last year, and Adjusted EBITDA margin increased 40 basis points to 7.1 percent.

“We are pleased with our improving profitability and second consecutive quarter of growth in Adjusted EBITDA,” said Steve Newlin, chairman, president and chief executive officer. “Our initiatives are taking hold, and we have created positive momentum. We reported another quarter of double digit EBITDA growth outside the U.S., and, within the U.S., turned the corner to EBITDA growth after eight consecutive quarters of decline. The U.S. results mark a key inflection point for us to build upon."

Company Performance

The results of Univar’s operating performance are described below and, unless otherwise indicated, are a comparison of first quarter 2017 results with first quarter 2016 results, including Adjusted EBITDA, which is reconciled to reported net income in the accompanying supplemental financial information.

(Unaudited)

Three months ended March 31, % change

(in millions) 2017 2016 $ change % change excl. currency

External Net Sales

USA

$ 1,150.9

$ 1,187.5

$ (36.6)

(3.1 )%

(3.1)%

Canada

307.3

272.7

34.6

12.7 %

8.6 %

EMEA

439.7

437.4

2.3

0.5 %

6.2 %

Rest of World

100.9

101.4

(0.5)

(0.5 )%

1.6 %

Total Consolidated Net Sales

$ 1,998.8

$ 1,999.0

$ (0.2)

— %

0.8 %

Gross Profit

USA

$ 262.9

$ 262.9

$ —

— %

— %

Canada

55.8

50.6

5.2

10.3 %

6.3 %

EMEA

101.8

96.2

5.6

5.8 %

11.5 %

Rest of World

18.9

20.6

(1.7)

(8.3 )%

(9.3)%

Total Consolidated Gross Profit

$ 439.4

$ 430.3

$ 9.1

2.1 %

2.9 %

Adjusted EBITDA

USA

$ 81.7

$ 80.8

$ 0.9

1.1 %

1.1 %

Canada

24.8

21.7

3.1

14.3 %

10.1 %

EMEA

35.9

28.3

7.6

26.9 %

37.1 %

Rest of World

6.7

7.9

(1.2)

(15.2 )%

(16.5)%

Other*

(6.8)

(4.6)

(2.2)

(47.8 )%

(47.8)%

Total Consolidated Adjusted EBITDA

$ 142.3

$ 134.1

$ 8.2

6.1 %

7.5 %

* Other represents unallocated corporate costs that do not directly benefit segments.

Canada – Net sales for the Canada segment increased 12.7 percent from $272.7 million to $307.3 million, primarily driven by higher sales in the Western Canada oil and gas market. Gross profit increased 10.3 percent from $50.6 million to $55.8 million from the rise in sales, but gross margin decreased 40 basis to 18.2 percent reflecting the change in product mix. Adjusted EBITDA increased 14.3 percent from $21.7 million to $24.8 million. Despite the decline in gross margin, Adjusted EBITDA margin increased 10 basis points to 8.1 percent due to lower operating expenses as a percent of sales.

Rest of World – Net sales for the Rest of World segment decreased 0.5 percent from $101.4 million to $100.9 million as higher average selling prices were more than offset by weaker demand in Mexico and continued sluggish economic conditions in Brazil. Gross profit decreased 8.3 percent from $20.6 million to $18.9 million, and gross margin decreased 160 basis points to 18.7 percent, primarily due to soft economic conditions in Mexico, particularly in the oil and gas market. Adjusted EBITDA decreased 15.2 percent from $7.9 million to $6.7 million, and Adjusted EBITDA margin decreased 120 basis points to 6.6 percent as lower gross margin was partially offset by cost initiatives that lowered operating expenses as a percent of sales.

Outlook

"In the first quarter we made meaningful progress against our improvement programs, as evidenced by the increase in our margins," said Carl Lukach, executive vice president and chief financial officer. "We remain focused on successfully executing our growth and productivity plans."

As a result, the Company is raising its guidance for the full year, to deliver mid-to-high single digit Adjusted EBITDA growth. Univar is now expecting mid-single digit EBITDA growth in the first half of this year, accelerating in the second half to near double-digit growth by year end.

For the second quarter of 2017, the Company expects Adjusted EBITDA growth of mid single digits from last year’s $148.2 million.

"Our teams are energized by early signs of success from our Commercial Greatness and Operational Excellence initiatives," said Steve Newlin, chairman, president and chief executive officer. "We have the right plans in place and have made a solid start towards achieving our goals for this year and beyond."

The Company will host a webcast with investors to discuss the first quarter results at 9:00 a.m. EDT on May 5, which can be accessed on the Investor Relations section of its website at http://investor.univar.com. Following the event, an archived version of the webcast and supporting materials will be available on the same website.

Adjusted EBITDA, Adjusted EBITDA Margin

The Company monitors the results of its operating segments separately for the purposes of making decisions about resource allocation and performance assessment. The Company evaluates performance on the basis of Adjusted EBITDA, which it defines as its consolidated net income (loss), plus the sum of interest expense, net of interest income, income tax expense (benefit), depreciation, amortization, other operating expenses, net (which primarily consists of pension mark to market adjustments, acquisition and integration related expenses, employee stock-based compensation expense, restructuring charges, business optimization, and other unusual or non-recurring expenses), impairment charges, loss on extinguishment of debt and other income (expense), net (which consists of gains and losses on foreign currency transactions and undesignated derivative instruments, debt refinancing costs, and other non-operating activity). Adjusted EBITDA margin is Adjusted EBITDA as a percentage of net sales. The Company believes that Adjusted EBITDA is an important indicator of operating performance because:

The Company reports Adjusted EBITDA to its lenders as required under the covenants of its credit agreements;

Adjusted EBITDA excludes the effects of income taxes, as well as the effects of financing and investing activities by eliminating the effects of interest, depreciation and amortization expenses;

The Company uses Adjusted EBITDA in setting performance incentive targets;

The Company considers gains (losses) on the acquisition, disposal and impairment of assets as resulting from investing decisions rather than ongoing operations; and

Other significant items, while periodically affecting the Company’s results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of its results.

Use of Non-GAAP Measures

The Company’s management believes that certain financial measures that do not comply with accounting principles generally accepted in the United States (“GAAP”) provide relevant and meaningful information concerning the ongoing operating results of the Company. Such non-GAAP financial measures are used from time to time herein but should not be viewed as a substitute for GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP are provided in Schedule A.

About Univar

Founded in 1924, Univar (NYSE: UNVR) is a global chemical and ingredients distributor and provider of value-added services, working with leading suppliers worldwide. Supported by a comprehensive team of sales and technical professionals with deep specialty and market expertise, Univar operates hundreds of distribution facilities throughout North America, Western Europe, Asia-Pacific and Latin America. Univar delivers tailored customer solutions through a broad product and services portfolio sustained by one of the most extensive industry distribution networks in the world. For more information, visit www.univar.com.

This press release includes certain statements relating to future events and our intentions, beliefs, expectations, and predictions for the future which are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events or results, and that actual events or results may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Any forward- looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.